Not upheld: Goods and services under S75 complaint against Mitsubishi HC Capital UK PLC trading as Novuna Personal Finance

Decision detail

Summary

Mr M complained that Novuna acted unfairly by being party to an unfair credit relationship and by rejecting his Section 75 claim regarding alleged misrepresentations by the timeshare Supplier. Mr M and Ms P purchased Fractional Club membership (a regulated timeshare contract with an investment element) on 7 May 2018 for £15,817, financed through a credit agreement with Novuna. Mr M raised his complaint on 12 June 2024, alleging the Supplier misrepresented the product as an investment in breach of Regulation 14(3) of the Timeshare Regulations, failed to provide adequate information, and that Novuna failed to disclose commission payments. The ombudsman found the Section 75 claim was time-barred (raised more than six years after the cause of action), and that even if regulatory breaches occurred, the credit relationship was not unfair under Section 140A because Mr M's evidence suggested he was primarily motivated by holiday options rather than investment returns, and the commission was low at 0.91% of the amount borrowed.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering that regulatory breaches do not automatically render a credit relationship unfair. The key findings were: (1) the Section 75 claim was time-barred under the Limitation Act 1980 as it was raised more than six years after the cause of action arose on 7 May 2018; (2) even if the Supplier breached Regulation 14(3) by marketing the membership as an investment, Mr M's evidence suggested he was primarily motivated by holiday options rather than investment returns, so any breach was not material to his decision; (3) the commission of 0.91% was low and did not create the extreme inequality of knowledge seen in the Supreme Court's Hopcraft case; (4) the Supplier did not owe Mr M a fiduciary duty when acting as credit broker; and (5) Mr M would have proceeded with the purchase regardless of any disclosure failures.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website